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Buy, Sell, Hold: 3 stocks and 2 sectors are being tracked by analysts today

Buy, Sell, Hold: 3 stocks and 2 sectors are being tracked by analysts today

ITC, HDFC Bank and IT sector, among others are on the radar of investors today.

ITC

Brokerage: Nomura | Rating: Buy | Target: Rs 389

Nomura believes that most headwinds for ITC are out of the way and strong earnings revival is likely. It sees earnings CAGR of 17.6 percent over FY17-20 on the back of revenue CAGR of 14 percent. Further, it has raised FY19 earnings by 2 percent to incorporate changes with GST rollout.

HDFC Bank

Brokerage: CLSA | Rating: Buy | Target: Rs 2,000

CLSA highlighted that the bank was investing in artificial intelligence, automation and branch digitisation. Further, it added, that the digitisation investment should aid employee productivity. Moreover, growth in debit cards will be the key to CASA growth going ahead. With agri loans growing, the report highlighted that NPLs could see some pressure from farm loan waivers.

Tata Power

Brokerage: Ambit | Rating: Buy | Target: Rs 112

The brokerage house said that losses from Mundra should reduce, given the company’s focus on reducing plant load factor. The company can also potentially raise Rs 6,200 crore from stake sale in group companies and demerger. It sees better profitability in renewables business, while it sees net debt to equity ratio to reduce to 2.1 times from 3.1 times.

Information Technology

Brokerage: CLSA

CLSA foresees poor large deal wins and ramps to drive an uninspiring Q1. June is likely to miss the seasonal strength of the quarter and may see organic constant currency QoQ growth ranging from -3 to 2 percent. Cross currencies and M&A make headline numbers barely better at -0.7-4 percent. It sees organic growth to be led by TCS, Infosys, and HCL Technologies, while it will be lagged by Tech Mahindra and Wipro. It expect Infosys and HCL Tech to retain guidance & Wipro to guide 1-3% for Q2. The brokerage house has a buy call on HCL Tech and TCs, while it has downgraded Wipro to outperform from buy. Meanwhile, it has an underperform rating on Infosys and sell call on Tech Mahindra.

Brokerage: Deutsche Bank

The global financial services firm sees weakness in financial services and retail verticals to lead to a soft start to the current fiscal. It is incorporating a stronger rupee, while it cut estimates and targets by 0.3-7 percent. Key risks, according to it, include recession in the US and Europe, affecting technology spend. Further, it expects top tier Indian vendors to report -0.8 to 5.3 percent quarter on quarter USD revenue growth.

Meanwhile, it expects Infosys to be at the top end of the range with 3 percent QoQ CC revenue growth and is likely to maintain revenue guidance of 6-5-8.5 percent year on year in CC terms.

Brokerage: Ambit

Ambit expects large IT companies to report revenue growth in the range of 3.6 percent decline to 2.7 percent growth. The dollar revenue performance should be in the range of 1.3 percent decline to 3.6 percent growth. Rise in rupee, wage hike and visa costs will result in upto 130 bps margin compression. Further, it expects mid-sized companies to report revenue growth of 1-4.2 percent, while there could be a margin compression of up to 190 basis points. It expects Infosys and HCL Technologies to retain FY18 guidance, while Infosys and Persistent will outperform peers on growth.

FMCG

Brokerage: Ambit

Ambit believes that FMCG’s downward trend may reverse from the second half of FY18 post the earnings being on a downward spiral for the past five years. It expects EPS CAGR of 17 percent for FY17-20 against 11 percent over FY14-17. Record valuation of 38x FY19e P/E factors in this recovery. Most FMCG companies may grow at an unlikely 15-20 percent CAGR for 20 years. Dabur and United Spirits are its top buys, while for other names, a recovery could coincide with mean reversion in multiples.





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